Key facts
- Russia's federal deficit hit RUB3.5tn (USD45bn) in January-February.
- Oil revenues fell 47% year-on-year in the first two months of the year.
- Ukrainian drone strikes caused a 43% weekly drop in Russian oil exports.
- Russia banned petrol exports for six months starting April 1.
- April oil and gas revenues are projected to reach 1.05-1.1 trillion rubles.
- The IMF revised Russia's full-year GDP growth forecast to +1.1%.
Russia's budget deficit has widened significantly in early 2024, despite a surge in oil prices, due to increased military spending and disruptions to its oil exports. In January-February, the federal deficit reached RUB3.5tn (USD45bn), with oil revenues falling 47% year-on-year. The Russian economy contracted by 1.5% in the first quarter.
Ukrainian drone strikes on oil infrastructure, including terminals at Primorsk and Ust-Luga, caused a 43% weekly drop in Russia's total oil exports between March 22 and 29. In response, Moscow banned petrol exports for six months starting April 1 to stabilize domestic fuel prices.
Despite these challenges, oil prices have remained high, exceeding USD120 per barrel for Urals Blend, driven by ongoing conflict in the Persian Gulf. April oil and gas revenues are projected to reach 1.05-1.1 trillion rubles, potentially leading to a balanced federal budget for the first time since September 2025. The International Monetary Fund has revised its full-year GDP growth forecast for Russia from +0.8% to +1.1%.
However, the improved fiscal outlook has not translated into broad economic optimism. Years of sanctions have impacted capital investment in the oil sector, leading to production constraints and aging infrastructure. While the government has canceled plans to cut spending for 2026, most of the additional revenue is expected to be channeled towards sustaining the war effort.